The European Commission today outlined a series of actions to strengthen the integrity of the European carbon market following cyber-thefts from several EU Emissions Trading System registries last month. The proposals will be discussed today by the EU Climate Change Committee, which brings together representatives from all Member States.

Connie Hedegaard, European Commissioner for Climate Action, said: "The Commission has identified a range of actions that Member State can already take in the short term to further improve security for example by regularly reviewing security plans, by reinforcing registry account policies and identity checks, by training registry users etc. For the medium and long term we reinforce efforts to identify solutions in cooperation both with Member States and through a regular dialogue with stakeholders."

The Commission and Member States have been collaborating constructively in the weeks since the thefts to ensure minimum security requirements for national ETS registries are put in place. At the meeting of the Climate Change Committee today, the Commission will recommend that Member States undertake a number of further short-term measures, including:

Regular reviews and updates of registrysecurity plans;

A review and strengthening of policies concerning the opening of registry accounts, building on best practice, and a risk basedreview of existing registry account holders;

Facilitation of information exchange between Member States regarding suspicious requests to open an account;

Better training for registry users;

Better use of options in existing EU legislation to prevent VAT fraud. Not all Member States have yet eliminated the risk of VAT fraud despite the existence of enabling legislation1 at EU level to do so.

In addition to these short term measures that can be implemented by Member States, the Commission:

will shortly propose a modification of the EU Registry Regulation so as to give a stronger legal basis for measures to protect the integrity of the carbon market and uphold the reputation of the EU ETS

will intensify work to make the European carbon market subject to appropriate financial markets legislation; to this end the Commission will bring forward and shortly initiate a public consultation on enhanced carbon market oversight already announced in its Communication on carbon market oversight of 21 December 20102

will pursue options for addressing the issue of stolen allowances with Member States and stakeholders. As a first step, the Commission will host a stakeholder meeting on registry security measures and stolen allowances in March,

is planning to intensifyits dialogue with relevant stakeholders on key implementation issues concerning the EU ETS

Background

On 19 January 2011 the Commission suspended transactions, except for the allocation and surrender of allowances, in all EU ETS national registries following cases of cyber theft from a number of registries. Ten registries have since been allowed to resume full operations after providing reasonable assurances that the minimum security requirements are in place.